The ratings on France-based Cap Gemini reflect the intensely competitive nature of the IT services industry, which results in low margins and continued capacity adjustment costs for the company. These factors are partly offset by Cap Gemini's broad and diversified capabilities in IT services--a relatively credit-friendly segment of the technology sector--and the company's conservative financial policies and financial profile. Cap Gemini's focus on operational improvement has enabled significant margin progress over the course of 2005. The group's EBITDA margin was up to 7.8% in second-half 2005, from 4.4% in the first half. We expect further year-on-year margin improvement during 2006, although at a more moderate pace. Revenue growth should also slow down to the mid single digits, in line with
